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Coca-Cola's Neville Isdell

Kick-starting a climate-friendly future

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BEIJING--Underscoring the importance of China as a consumer market and the need for more focus on environmental issues in the mainland, Coca-Cola’s chairman-CEO, Neville Isdell, recently visited Beijing, home of the 2008 Olympic Games.

Mr. Isdell, who joined the global Olympic sponsor in 1966 in Zambia, has worked for the company in Africa, Asia/Pacific, Europe and North America.

He recently addressed a group of senior executives in Beijing as part of the Greenpeace China business lecture series. Mr. Isdell spoke about Coke's environmental practices, a serious issue for the company, which has faced controversy about pesticides possibly showing up in its products and overuse of local water supplies in places like India. Below is an excerpt from his speech “The virtuous cycle: Kick-starting a climate-friendly future.”

We recognize that we need to be part of the solution on global issues that threaten the communities we serve, and that are relevant to our business, and therefore we've made a number of commitments. We've set the aspirational goal of returning to communities and to nature an amount of water equivalent to what we use in all of our beverages, and in their production.

We call it water neutrality. We're expanding our efforts to recycle and to reuse PET plastic bottles, and today we're building the world’s largest PET bottle-to-bottle recycling facility in the United States. We also engage in significant work to understand our climate footprint, and to set goals in this area...You can see some of these commitments coming to life, here in China.

For example, together with our bottlers, we're improving our water efficiency at our bottling plants. In China, we reduced the amount of water it takes to create our finished beverages by 8%, last year alone. We're focusing on projects around the Yangtze River. We've also invested globally in rainwater harvesting and storage systems. In Ningxia, we've improved the water supply for 3,000 residents. Now, this is a small example, but I talked about communities--success is community-based.

We're working with the United Nations Development Program and the Chinese government, to enhance water access and sanitation in many parts of rural China.

Since 2005, we've partnered with the Beijing Organizing Committee for the Olympic Games, BOCOG, on an environmental education program that has encouraged more than 250,000 people to "Save a Barrel of Water." In the aggregate, this will benefit millions of people in China in the future.

When it comes to global warming...I don't need to make the case that global climate change is occurring; that man-made gas emissions are a crucial factor; and that the implications for our planet are profound--from biodiversity to public health, and from agriculture to water usage, generally--which makes it, of course, very relevant for a business like Coca-Cola.

So, let me just share one example of what's at stake if we do not act. One study projects that climate change could force one billion people to leave their homes over the next 50 years.

That is one in every nine people on this planet, one in every nine of our consumers. Scientists from the Intergovernmental Panel on Climate Change tell us our global society needs to reduce greenhouse gas emissions between 50% and 80% in this century.

If we are going to meet this challenge, than every sector of society will have to be part of that solution. So, today I'm focusing on what business and NGOs can do together.

But I also want to acknowledge that political systems must also act. That's why, last November, Coca-Cola and many other companies signed a communiqué, prior to the Bali meeting.

We asked world leaders to work towards a strong international framework, to govern global carbon emissions, and to combat climate change. I believe that we stand at a unique moment in time, a window when we can still make changes that will prevent the worst forms of climate change from happening.

For example, look at hydrofluorocarbons, known as HFCs. Today, in order to cool food, beverages, or the air in our offices and homes, the world mainly uses HFCs. Unfortunately, they are a potent greenhouse gas. Today HFCs represent only 2% of the climate change problem.

But, they are forecast to grow to 8% by 2050. We don't need HFCs, because alternatives are available. If just the commercial refrigeration sector moved to climate-friendly alternatives by 2050, the corresponding emission reduction in that year alone would be 1.2 billion metric tons--about the same as the total annual emissions of Germany or Japan.

So what is Coca-Cola's connection to climate change? We've examined our carbon footprint, and it touches on four areas--our packaging, our manufacturing operations and those of our bottling partners, transportation, and cold drink equipment. We are working to reduce our impact in all of these areas. For example, on packaging, we are making bottles that have less plastic, or less glass.

In our manufacturing operations, we are making investments in energy efficiency. Some of our bottlers have adopted hybrid trucks, others are implementing green distribution systems, to reduce miles and emissions.

But cold drink equipment [represents] our largest, single impact on global warming. [I] refer to those glass-door coolers that you see in convenience stores, the vending machines you'll find in cinemas, and the fountain equipment you see in restaurants.

Our bottling system around the world has more than 10 million coolers and vending machines in place today. They impact the climate in three ways--through their energy use, in the insulation foam that is used inside, and in the refrigerant gas which is used in their cooling system.

HFCs are used as ozone-neutral gas. Unfortunately...they are a potent greenhouse gas. So, about eight years ago, with alternatives within reach, we were among the very first companies to say, "Our future shall be HFC free."

The world does not need HFCs. We could all switch to alternative technologies based on natural gases, and we can have a significant positive impact on climate protection.

We have determined that the best alternative use is CO2. Now, there’s somewhat of an irony around CO2, because some say, "Well, wait a minute, isn't that the gas that’s released when we produce electricity or drive cars; isn't CO2 actually part of the overall problem?"

Well, yes it is, but it also happens to be 1,300 times less potent than HFCs. So, when we use CO2 in our refrigeration system, it also becomes 5% more energy efficient. We've tested CO2 machines in the lab and in the field, and on some 10,000 Coke machines. CO2 works. It's more efficient, and importantly, it is safe. This summer, at the Olympic Games here in Beijing, all of the refrigeration equipment we use will be based on CO2.

Is it enough?

No. We're not there yet, and the reasons can best be described as "the chicken and the egg" problem. It's very difficult for companies like ours to buy more climate-friendly coolers, until the price comes down. But the price won't come down until other companies other than us buy more.

If other companies join us in creating demand for this equipment, we could see suppliers here in China expanding their production facilities for climate-friendly equipment.

When that happens, it'll be easier and more cost-effective for this equipment to be deployed throughout China, and of course that means it will be cheaper, because it will not be subject to the current import duties. Further, by embracing the next generation of refrigeration technology, China can create added value and earn a competitive advantage in the marketplace.

And as we say, within our company, "If not us, who?" To help our planet, we need to push the demand curve. Act faster than regulation, define the technology, and drive the price down.